Mayor comments on financial impacts of pandemic

Apr 20, 2020 | 4:51 PM Pete McIntyre

The following is a statement provided to media by the City of Kelowna from Mayor Colin Basran.

Mayor’s statement on financial impacts of pandemic

April 20, 2020

Today, I wanted to provide some insight into the city’s approach to weathering the financial impacts resulting from COVID – 19 through these early days.

But before I start, I want to acknowledge our heavy hearts not only here in Kelowna but across Canada and the world.

This past weekend in rural Nova Scotia at least 19 people lost their lives including 23-year RCMP veteran Constable Heidi Stevenson. This tragic and senseless act of violence is the worst mass killing in Canada’s history and our heartfelt condolences go to all the families, friends and colleagues.

Closer to home, a young child died yesterday as a result of an incident in Rutland. I want the family to know Kelowna shares in your heartbreak.

I want to thank everyone for following the directions of the provincial health officer. Dr. Bonnie Henry said last Friday that thanks to everyone’s efforts we have drastically reduced the number of cases in the province compared to what could have been. While we are not out of the woods, the news is encouraging. So please stay the course and keep following Dr. Henry’s recommendations.

So how is the City dealing with the financial impacts created by COVID-19?

I think it’s important to note every City is unique, as are the many approaches taken by various local governments. While comparisons are tempting, they do not consider the different fiscal realities, services and operations of individual local governments and they do not lead to good fiscal policy.

For example, due to our responsible fiscal management over the years, we only rely on property taxes to fund approximately one third of our operations whereas other cities can be over 70 per cent reliant on taxation.

Another example is that the City of Kelowna has three major recreation facilities but we only operate one. As a result, layoffs on the surface may seem smaller than other local governments. But if you add up the staffing at all three facilities, the numbers would unfortunately be significantly larger.

It’s early days and there is no clear line of sight into the long-term impacts of the pandemic; assumptions are volatile, making projections extremely fluid. The City’s main sources of revenue – taxation, reserves, and fees and charges – each provide approximately 30 per cent of our revenue.

We already know many fees and charges are down and we anticipate deferred payment of taxation revenue. The question for both of these revenue sources is, by how much and how long?

The City will be in a better position to forecast actual cash-flow after we start collecting taxes and monitoring daily revenues.

As such during these early days it’s important the City continue to take a prudent and measured approach, which has served us well so far and will continue to serve our community well both in the short- and long-term. We will continue to adjust as needed and be mindful of the City’s long-term financial sustainability.

The City’s primary strategy at this time is to reduce expenses and encourage all who can to pay property taxes by July 2, 2020, so we can continue delivering services our citizens depend on daily.

The City can borrow to assist with city cash flow to maintain essential services if necessary; however, this will only be done if absolutely necessary.

On April 16, the Province announced that local governments can defer the payment of school taxes until the end of 2020. This measure will help with short-term cash flow as the school tax portion remittance represents approximately $40 million.

The City is currently reviewing other options that all come with long-term impacts and need to be weighed carefully. This includes borrowing against capital reserves, which would impact our capital plan and our ability to maintain infrastructure.

As mentioned, it’s critical that those who can pay, do pay their taxes on July 2, 2020, to avoid cuts to city services, delay or cancellation of important municipal infrastructure or increased borrowing.

Approximately 40 per cent of your annual tax bill goes to other taxing authorities including health and schools. The City is still required to pay all other taxing authorities by August 1 regardless of whether the City receives full payment. School taxes have been deferred to the end of the year, but will still need to be paid.

The City has already taken several measures to help citizens. These include:

delaying the late penalty fee for property taxes
waiving several charges and fees
providing free transit and parking in certain areas
reduction in 2020 taxation which will be presented to Council on May 4

I am hoping that the unprecedented financial programs by both the federal and provincial governments will help many of our citizens and businesses weather this storm. The provincial government also has a property tax deferral program. You may qualify if you’re:

55 or older during the current year
a surviving spouse of any age
a person with disabilities or
if you’re a parent, stepparent or financially supporting a child.

To reduce expenses, the City has already cut its workforce by 10 per cent and we will continue to monitor and adjust as required.

City budgets have been cut and some capital projects have been deferred. Specifics will be available when final budget is presented to Council on May 4, which is expected to include a reduction from the 4.15 per cent approved by Council for the provisional budget in December 2019.

The City provides services citizens rely on daily – even during the pandemic.

These services include everything from police services to drinking water to landfill operations and everything in between. Approximately 65 per cent of the City’s workforce and the services they deliver have not been directly impacted by COVID-19 and others like finance, human resources and information services are critical supports to our city’s operations.

Other positions such as planners, plan checkers and building inspectors keep working, which keeps our community working.

While our economy is hurting, there are signs of resiliency. In March 2020 the City issued 159 building permits, while down 25 per cent compared to March 2019 the number is still above the 10-year average.

In March, our building inspectors conducted more than 1,600 inspections, only a slight drop from 2019. While it’s unclear what the near future will look like, we are happy to see people still investing in Kelowna and keeping our trades and professionals working.

The Regional Mayors’ and WFN Chief’s Economic Recovery Task Force, which I co-chair, will focus on helping to get our business community up and running as fast as possible once the pandemic measures are lifted so we can get everyone back to work as soon as possible.

Kelowna is recognized for its entrepreneurial spirit and I know together we will emerge not only stronger but smarter and more resilient. Together we are turning the curve and together we will emerge stronger.